Many people just leave the account behind. Some choose to roll the balance into their new company plan, while others may decide to open up a self-directed IRA account. There are positives and negatives to all these options which should be understood before selecting a course of action.
The positive to leaving your IRA behind is simplicity; you don't have to do anything at all when you change jobs. However, if you decide to leave your IRA where it is, you run the risk of your previous employer changing custodians and turning over your account to another investment company. Maybe it will be one that you don't like or one whose returns are not consistent with the previous manager’s.
Leaving it behind can also increase the amount of effort required to keep track of your accounts, especially if you change jobs multiple times. I see new clients all the time who come in with multiple IRAs and complaining that it’s too much work to follow. So in the long run, simplicity may not be an advantage.
You can always move your account into the new retirement plan at your next job. This can be done as a "trustee-to-trustee transfer” and is usually the best way to do so, since you never come in direct contact with the funds; the money goes from your old custodian to the new one directly.
Your previous custodian will then issue a 1099r at the end of the tax year, showing that the money moved. While this is easy, you are now limited to the investments in the new company’s plan and possibly higher fees than you want to pay. More importantly, you cannot transfer the funds again to a different plan unless you retire, leave your job or if the plan is canceled by the company.
The final option is to move the money into a self-directed IRA. This option affords you the most choices of investments and the highest amount of control over the costs you’ll pay. However, you should be a bit savvy in your knowledge of money management or hire a qualified adviser to assist in the move.
As with the transfer option above, a "trustee-to-trustee transfer” would be best to limit your contact with the funds. You could also choose a rollover, where you withdraw the funds and move them yourself. Be aware that your custodian may withhold 20 percent for taxes, and you only have 60 days in which to complete the transaction before it becomes a permanent distribution (one that cannot be undone).
As with all financial decisions it is best to consult your tax and financial professionals to seek out advice that is tailored to your situation. Think through your options before you make a move, because once it’s done you may not be able to undo it.